Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Question
Chapter 1, Problem 19CYBK
To determine
Introduction:In case of new clients, clients acceptance decision refers to valuation of clients related risks and associated fees. In case of exisiting clients, clients continuance decision refers to determination of continuance of audit work in the following period basedon various factors.
To identify:The statement which is incorrect in realtion to client acceptance/ continuance decisions.
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Describe a situation that would require an auditor to give an unmodified opinion without a standard report. Describe a situation that would cause an auditor to modify their opinion.
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Which sentence below is true about audit risk:
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Audit risk can be completely eliminated through appropriate sampling of transactions.
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Audit is what creates the demand for an audit.
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Chapter 1 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 1 - Prob. 1CYBKCh. 1 - Prob. 2CYBKCh. 1 - Prob. 3CYBKCh. 1 - Prob. 4CYBKCh. 1 - Prob. 5CYBKCh. 1 - Prob. 6CYBKCh. 1 - Prob. 7CYBKCh. 1 - Prob. 8CYBKCh. 1 - Prob. 9CYBKCh. 1 - Prob. 10CYBK
Ch. 1 - Prob. 11CYBKCh. 1 - Prob. 12CYBKCh. 1 - Utilitarian theory holds that what is ethical is...Ch. 1 - Prob. 14CYBKCh. 1 - Which of the following statements related to...Ch. 1 - Utilitarianism does not require which of the...Ch. 1 - Prob. 17CYBKCh. 1 - Prob. 18CYBKCh. 1 - Prob. 19CYBKCh. 1 - Which of the following factors is not an example...Ch. 1 - Prob. 1RQSCCh. 1 - Prob. 2RQSCCh. 1 - Prob. 3RQSCCh. 1 - Prob. 4RQSCCh. 1 - Prob. 5RQSCCh. 1 - Prob. 6RQSCCh. 1 - Prob. 7RQSCCh. 1 - Prob. 8RQSCCh. 1 - Prob. 9RQSCCh. 1 - Prob. 10RQSCCh. 1 - Prob. 11RQSCCh. 1 - Prob. 12RQSCCh. 1 - Prob. 13RQSCCh. 1 - Prob. 14RQSCCh. 1 - Prob. 15RQSCCh. 1 - Prob. 16RQSCCh. 1 - Prob. 17RQSCCh. 1 - Prob. 18RQSCCh. 1 - Prob. 19RQSCCh. 1 - Prob. 20RQSCCh. 1 - Prob. 21RQSCCh. 1 - Prob. 22RQSCCh. 1 - Prob. 23RQSCCh. 1 - Prob. 24RQSCCh. 1 - Prob. 25RQSCCh. 1 - Prob. 26RQSCCh. 1 - Prob. 27RQSCCh. 1 - Prob. 28RQSCCh. 1 - Prob. 29RQSCCh. 1 - Prob. 30RQSCCh. 1 - Prob. 31RQSCCh. 1 - Refer to the Why It Matters feature “What Is...Ch. 1 - Prob. 33RQSCCh. 1 - Prob. 34RQSCCh. 1 - Prob. 35RQSCCh. 1 - Prob. 36RQSCCh. 1 - Prob. 37RQSCCh. 1 - As the auditor for XYZ Company, you discover that...Ch. 1 - Prob. 39RQSCCh. 1 - Prob. 40RQSCCh. 1 - Prob. 41RQSCCh. 1 - Prob. 42RQSCCh. 1 - Prob. 43FFCh. 1 - Prob. 44FFCh. 1 - Prob. 45FFCh. 1 - Prob. 46FF
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Similar questions
- Simplified approaches for preparing pro forma statements assume that the firm’s past financial condition is an accurate indicator of the future. There are several examples from the past where organizations were not accurately reporting their financial information. Discuss the relationship between the external auditor and the organization. What steps have been taken to ensure that the relationship is truly neutral and no bias is shown by the external auditing firm?arrow_forwardThe following questions deal with assessing controlrisk in a financial statement audit. Choose the best response.a. When obtaining an understanding of an entity’s internal control procedures, anauditor should concentrate on the substance of procedures rather than their formbecause:(1) the procedures may be operating effectively but may not be documented.(2) management may establish appropriate procedures but not enforce compliancewith them.(3) the procedures may be so inappropriate that no reliance is contemplated by theauditor.(4) management may implement procedures whose costs exceeds their benefitsarrow_forwardPLEASE ANSWER THIS ASAP. THANK YOU SO MUCH. 1.Which of the following statements is incorrect? a. Management assertions are implied or expressed representations by management about classes of transactions, account balances and presentation and disclosures contained in the financial statements. b. Transaction cycles may vary from one entity to another and may also be affected by the nature of industry of the client. c. The primary goal of an auditor in an audit is to issue an opinion that the financial statements of an entity are fairly stated, in all material respects, in accordance with the applicable financial reporting framework. d. Reasonable assurance is moderate but not absolute level of assurance that the financial statements are free from material misstatements. 2. Which of the following statements does not pertain to responsibilities of management and those in charge of governance? a. Establish and implement internal controls relevant to the preparation of financial reports.…arrow_forward
- Although audit reports should provide assurance to investors and creditors that financial information presented is free of material misstatements and in accordance with GAAP, should audit reports be used to solicit investments, credit, or sales in a manner similar to Jim Bakker’s? How can a CPA firm prevent such behavior?arrow_forwardIn applying a top-down, risk-based approach to an audit, should the auditor start with the ending account balances or does the auditor start with the significant processes that lead to a material account balances? Is one approach preferred over the other? Explain. In what ways does the practice of internal auditing differ from the practice of public accounting? To whom is the internal auditing function responsible?arrow_forwardFollowing are typical questions that might appear on an internal control questionnaire for investments in marketable securities. Is custody of investment securities maintained by an employee who does not maintain the detailed records of the securities? Are securities registered in the company name? Are investment activities reviewed by an investment committee of the board of directors? Assuming that the operating effectiveness of each of the above procedures is found to be inadequate, describe how the auditors might alter their substantive procedures to compensate for the increased level of control risk.arrow_forward
- Noncompliance includes transactions entered by the entity’s employees and management in their personal capacity. The preliminary judgment or estimate about materiality represents the maximum amount by which a set of financial statements could be misstated and still not cause the auditor to believe that the decisions of reasonable users would be affected. Group of answer choices False, True True, False True, True False, Falsearrow_forwardDo you think the concept of materiality is incompatible with ethical behavior? Consider in your answer how materiality judgments affect risk assessment in an audit of financial statements.arrow_forwardWhy is there a need on the part of the client entity to monitor internal controls over time? a. Because the auditor needs to obtain understanding of internal control b. Because unmonitored controls tend to deteriorate over time c. Because it will affect the timing of substantive audit procedures d. Because it is a requirement of the applicable financial reporting frameworkarrow_forward
- The acceptable audit risk for the financial statements overall tends to be low and is set by the auditor at the beginning of the audit. How low audit risk is set is impacted by which of the following factors? (Several choices may be correct.) OG. Whether the entity has a strong tone at the top OC. The risk the client may no longer continue to be a going concern OB. The number of users relying on the financial statements O E. Past issues with management integrity O A. The attitude of the organization toward controls O F. Expansion of the client into new markets OD. Changes to the industry in which the client operatesarrow_forwardWhat type of opinion(s) would the audit team issue on the effectiveness of internal control over financial reporting if a material weakness in internal control exists? How would the standard report be modified?arrow_forwardDescribe what is meant by acceptable audit risk. Explain whyeach of the following statements is true:a. A CPA firm should attempt to achieve the same audit risk for all audit clients whencircumstances are similar.b. A CPA firm should decrease acceptable audit risk for audit clients when external usersrely heavily on the statements.c. A CPA firm should decrease acceptable audit risk for audit clients when engagementrisk is high.d. Different CPA firms should attempt to achieve reasonably similar audit risks forclients with similar circumstancesarrow_forward
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